Otago Daily Times

First­half hit for Ry­man Health­care


AUCK­LAND: Ry­man Health­care spent $50 mil­lion on its pan­demic re­sponse to pro­tect res­i­dents and staff, despite no Covid19 among 12,000 res­i­dents and 6100 staff.

Since Jan­uary, that has been the cost to the Aus­tralasian re­tire­ment vil­lage de­vel­oper and owner, which has its head­quar­ters in Christchur­ch and is New Zealand’s biggest busi­ness in the listed sec­tor.

Its first­half profit fell 14.2% to $88.4 mil­lion.

The com­pany’s in­vestor pre­sen­ta­tion car­ried the line, ‘‘$50 mil­lion in­vest­ment in Covid­19 mea­sures since Jan­uary 2020.’’

Chief ex­ec­u­tive Gor­don Ma­cLeod said the pan­demic had in­creased costs and re­stricted sales and constructi­on ac­tiv­ity in key mar­kets.

How­ever, with lock­downs lift­ing in Vic­to­ria and a buoy­ant hous­ing mar­ket here, the com­pany was ex­pect­ing con­di­tions to im­prove in the sec­ond half, and it had a record num­ber of new vil­lages in the pipe­line to take ad­van­tage of the re­cov­ery.

‘‘It has been a tough six months due to the on­go­ing im­pact of the pan­demic, which in­creased costs sub­stan­tially and re­stricted our abil­ity to sell in key mar­kets dur­ing the ex­tended lock­downs,’’ Mr Ma­cLeod said.

‘‘While there is likely to be . . . on­go­ing un­cer­tainty due to the pan­demic, there is clearly a lot of pent­up de­mand in the hous­ing mar­ket and we are in a good po­si­tion to con­tinue to in­vest heav­ily in new homes and jobs.’’

The com­pany an­tic­i­pated sec­ond­half cash col­lec­tions of at least $275 mil­lion from new sales, and had 12 vil­lages in progress.

The profit was for the hal­fyear from April to Septem­ber 2020.

To­tal as­sets now stood at $8.34 bil­lion, up 14.9%. Ry­man had a ‘‘re­sales bank’’ of $945 mil­lion, which it said un­der­pinned fu­ture growth and re­silience.

It did not say this, but many re­sales hap­pen when prop­er­ties are va­cated be­cause peo­ple get sick or die; the busi­ness has sig­nif­i­cant po­ten­tial turnover from that ac­tiv­ity.

Ry­man makes a 20% to 30% de­vel­op­ment mar­gin when it builds new vil­lages.

It said it was now build­ing across 12 sites, up from just four two years ago.

Shares are trad­ing at about $15.50, giv­ing a mar­ket cap­i­tal­i­sa­tion of $7.7 bil­lion. The price dropped sharply in March when the pan­demic struck, fall­ing as low as $6.60. Shares had traded as high at $17 ear­lier this year — by April, they were back at $10.

How­ever, the share price has risen steadily since.

On Au­gust 13, share­hold­ers at Ry­man’s online an­nual meet­ing heard from chair­man David Kerr that the pan­demic had ac­tu­ally ‘‘re­in­forced the attraction of liv­ing in our vil­lages where res­i­dents en­joy se­cu­rity, com­pan­ion­ship and a strong sense of com­mu­nity’’.

Only about 43,000 New Zealan­ders live in re­tire­ment vil­lages, ac­cord­ing to a study by real es­tate spe­cial­ists JLL.

In the full year, Ry­man’s au­dited un­der­ly­ing profit was $242 mil­lion, up 6.6%, driven by strong de­mand at new vil­lages.

The re­ported, or IFRS, profit was down 19% to $265 mil­lion due to Covid­19­re­lated prop­erty val­u­a­tion changes.

Ry­man has hit com­mu­nity op­po­si­tion to some of its plans lately.

Ko­hi­marama res­i­dents want the Auck­land Council to re­ject a $150 mil­lion Ry­man Health­care re­tire­ment vil­lage plan which they say breaches height lim­its by more than dou­ble.

The com­pany’s plans in Mel­bourne’s Coburg have met op­po­si­tion, too — from lo­cal Peter Robert­son, who said its ap­pli­ca­tion for a new vil­lage there had lapsed due to in­ac­tion. Ry­man in re­turn de­nies that and says it needs to start by next Fe­bru­ary and it would seek an ex­ten­sion. — The New Zealand Her­ald

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